Patterson posts record quarterly results amid shift toward animal health

Minnesota-based distributor Patterson Companies ($PDCO) reported record fiscal fourth-quarter results Thursday that were boosted by its fast-growing animal health unit. The company's sales rose 4% year-over-year to $1.1 billion, while its net income came in at $64.5 million ($0.65 per diluted share), compared to $55.7 million ($0.55) in the same period a year ago.

During the quarter, sales in the Patterson Veterinary unit rose 2.7% to $356 million on a constant-currency basis, driven largely by a 32% increase in equipment sales. For the full fiscal year, the unit pulled in $1.5 billion in sales, up 22.6% from 2014. Patterson's total 2015 revenues rose 8% to $4.4 billion, while its net income jumped 11% to $223,261. Its adjusted diluted earnings per share for the year increased from $2.10 to $2.27.

In May, Patterson announced its intention to acquire distributor Animal Health International (AHI) for $1.1 billion, and during a conference call with analysts after the earnings release, CEO Scott Anderson reiterated his prediction that the addition would double the size Patterson's veterinary unit. "We will significantly expand our presence in the production animal market, which has its own very promising long-term growth prospects, and it will create meaningful leverage across our animal health platform," he said.

Patterson has been growing its presence in animal health since 2013, when it acquired the U.K.'s National Veterinary Services. But while it has succeeded in the vet market, the company has been struggling with its unit that distributes equipment to medical rehabilitation facilities. In April, reports emerged that the company had retained Bank of America to look into a sale of the medical unit.

Selling the medical division "would allow us to deepen our commitment to our dental and veterinary businesses," Anderson said during earnings the call. If the company completes both the AHI acquisition and the casting off of the medical unit "it will transform the strategic growth profile of the company," he added.

Patterson told analysts to expect that its fiscal 2016 earnings per share would range from $2.40 to $2.50 on a diluted basis. Patterson's share price has risen 22% in the last 12 months to $47.17.

- here's the earnings release
- access a transcript of the earnings call here

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